FCA Declares £147m Fine on Credit Suisse for Due Diligence Failings

Richard Marley
October 28, 2021
2 minutes read
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Credit Suisse was fined £147,190,200 for breaching FCA’s Principle 2 and 3 for Businesses as it failed to implement risk management measures and financial crime prevention systems.

A failure on part of Credit Suisse in due diligence led to the second-largest fine issued by the FCA. The bank arranged approximately $1.3 billion in the form of loans and bonds to allow the Republic of Mozambique to fund tuna fishing initiatives and coastal inspection.

According to the FCA, this fine was imposed for “serious financial crime due diligence failings” from 2012 to 2016 when Credit Suisse was helping the Republic of Mozambique in raising loans. As per the FCA, these loans were “tainted by corruption”.

BREAKING: FCA fines Credit Suisse over £147m for “due diligence failings” https://t.co/owPU31r3oT pic.twitter.com/NBtoJigurW

— City A.M. (@CityAM) October 19, 2021

The long-overdue “tuna bonds” case has trapped Credit Suisse and other involved entities in several civil, regulatory, and criminal cases. The detailed investigation found that payments of up to $53 million were made to three of Credit Suisse’s employees as bribes.

Additionally, significant amounts of the loan were swindled and were even used for purchasing military equipment. The bank was found to have breached Principle 3 of the FCA’s Principles for Businesses due to insufficient due diligence while arranging loans for the Republic of Mozambique.

Credit Suisse also violated Principle 2 by failing to conduct business with care, skill, and diligence. The FCA pointed out the lack of reporting to the “relevant authorities” during the final transaction period in 2016 when the bank had considerable evidence “to ground a reasonable suspicion that [an earlier loan] may have been tainted, either by corruption or other financial crime”.

The FCA fine fulfilled multi-jurisdictional obligations that involve the US Department of Justice as well as the US Securities and Exchange Commission along with the Swiss Financial Market Supervisory Authority.

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IMF Urges Central Bank of Seychelles to Upgrade Transparency and AML Controls
The Central Bank of Seychelles (CBS) has been advised by the International Monetary Fund (IMF) to have transparent practices and AML controls.

The International Monetary Fund (IMF) has urged CBS, the Central Bank of Seychelles, to incorporate refined practices in different accountability and governance areas. These include confidentiality, supervisory & confidentiality policies along with internal AML/CFT protocols.

According to the statement by IMF, CBS is giving information regarding legal structure, mandate, and a few key elements related to anti-corruption arrangements, risk and human resource management, and accountability on its website.

The review of IMF stated, “To better support the public’s perception of the CBS as a well-governed institution, it should consider highlighting these aspects in its annual report, and/or provide additional information on its website, particularly on human capital management, anti-corruption policies and decision-making arrangements.”

As per IMF’s review, CBS needs to work on several elements, including information’s accessibility to its internal governance arrangements. It could be done by maintaining the Annual Report’s respective sections and website. Moreover, it must overhaul the proceedings by publishing its Code of Conduct and Ethics.

“The legal mechanism for confidentiality issues has been established, but the dissemination and disclosure of the confidentiality framework could be enhanced. The CBS discloses basic information on its AML/CFT supervisory powers and policies, as well as on its related internal control framework, but disclosures on the processes and outcomes of its AML/CFT external policies and internal controls are limited,” said CBS Transparency Code Review of IMF.

IMF review said that the ensurance of transparency practices with new functions and powers by CBS would be effective for its own benefit. The practices adopted by CBS must comply with the powers acquired by the coming legislative act.

IMF’s CBS Transparency Code Review said, “In the last few years, the CBS’s regulatory powers have been substantially expanded with the adoption of AML/CFT Act and Financial Consumer Protection Act. Moreover, the forthcoming Financial Stability Act is expected to provide a transparent legal basis for the CBS’s (and other financial sector regulators) actions on financial stability. These legislative acts will require an expansion of the CBS’s transparency practices so that the related CBS activities continue to be appropriately disclosed to stakeholders.”

The review aims to identify the strength and improvement areas of CBS by allowing it to evaluate its transparency practices. The review presents the map of CBS’s transparency choices in comparison to several practices in three different categories (core, comprehensive, and expanded).

Suggested Read: FCA Advises Firms to Embed Data and Technology to Combat Financial Crimes

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FCA Declares £147m Fine on Credit Suisse for Due Diligence Failings

An Overview of Perpetual KYC

The Need for Perpetual KYC in Banking Sector

Recent Crime Cases in the Banking Industry

Criminal Gang in US Charged with Bank Fraud and Money Laundering

Two Former Employees of Major Bank Charged with Loan Fraud

Global Regulatory Authorities Monitoring the Banking Sector

US

UK

Securing Banking Organizations Through Perpetual KYC

What Shufti Pro Offers?

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